The catalytic combustion of toluene over Pd-Cu/USY zeolite has been examined by using FT-IR spectroscopy in a closed system under dry and humid conditions. The catalytic combustion of toluene (700 ppmv) in the temperature range of 80.220 °C has been investigated by using a fixed bed reactor. The Pd-Cu/USY catalyst showed the highest catalytic performance with respects to the PdO-CuO/USY and Pd/USY. Comparing to PdO/Al2O3 catalysts, the slight improvement in conversion was observed over PdO/USY catalysts under humid condition since USY zeolite is hydrophobic substrate and water give an additional oxygen source to zeolite surface like oxygen. The reduced catalysts showed more enhanced catalytic activity due to the reduced activation energy of combustion of toluene than oxidized catalysts such as PdO/USY and PdO-CuO/USY.